Why Customers Leave and the Cost of Losing a Customer

Apr 3, 2013

Businesses spend a lot of time and money figuring out how to attract new customers to their product or service. But less thought is given to customers who stop buying from a particular business and simply leave. Customers come and go from your business for various reasons. First we have to understand what situations lead to a loss of customers.

Why Do Customers Leave a Company?

- Treatment they receive. If you’re level of service and respect isn’t up to the customers expectations they are likely to stop dealing with you. This could be treatment they receive at the point of sale, the way a service is delivered or during the after sales support. This is by far the biggest reason for someone to end their business relationship.

- Dissatisfaction with product or service. The quality of your product or service may not be up to scratch.

- Start doing business with your competitors. If your competition can deliver better value, cheaper prices or have a unique selling point above your offerings, then you are bound to lose customers.

- Seek out alternatives. Consumers are always on the lookout for solutions to their problems or needs. They might find a different solution, which doesn’t involve your business.

- Simply move away. If your business operates locally, then customers moving away to different towns or cities would be the reason for losing them.

The Effects of Poor Customer Service

Lousy customer service has led to the end of many business relationships. It is the root cause of lost relationships. Poor customer service leads to customers:

- Repeating themselves to different support member

- Having to wait too long for assistance

- Getting trapped in an automated self-service system

- Talking to representatives who don’t know their history

- Not able to easily switch means of communication

Once a customer has been lost in this way, most will take their business to a direct competitor. This causes further damage to your business.

Social Media Overload

Social media sites are usually an effective marketing tool and a great source of new customers. But failing to follow social media etiquette will have your customers leaving in droves. Twitter is a prime example of this. Here are some rookie mistakes to avoid with twitter.

- Over-tweeting. Don’t send an overwhelming barrage of tweets at your followers. An annoyed customer is a lost customer.

- Too self-promotional. Your products and services should be promoted in direct response to a customers query.

- Failing to connect. Engagement is essential in social networks. Address customer complaints in a timely manner to make a good impression and turn an angry customer into a loyal one.

- Following desperately. It isn’t just how many followers you have, but also how many people you follow. Giving people a reason to listen to you is a better strategy than desperately following as many people as possible.

Acquisition vs. Retention

Most companies put most of their efforts into acquiring new customers. However the cost of gaining a new customer is 6 to 7 times higher than the cost of retaining an existing customer. Shifting some focus to customer retention will give a business a real competitive edge.

After being physically and mentally disabled by a brain tumor, Brandon overcame the odds to regain his health to help his pregnant wife in her fight against stage 3 breast cancer. A couple of years later he launched his blog. Today over 1 million business owners read his blog every month. Read Brandon's inspirational comeback story here.